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Estate Planning & Retirement Accounts

An integral part of any estate plan includes a thorough review of any existing retirement accounts and deciding how they should be structured to best assist you in reaching your retirement goals. At Carolina Estate Planning, Attorney Jeff Bloomfield appreciates your desire to plan ahead for your golden years and will provide adept guidance through every step of the process.

Types of Individual Retirement Accounts (IRAs) 

There are two main types of IRAs. They are:

Traditional Individual Account (Traditional IRA)

Generally speaking, an individual may make tax deductible contributions into a traditional IRA account. When distributions are made from Traditional IRAs they are taxed as ordinary income as long as they are not made before the beneficiary is 59 ½ years old. Distributions must start being made when the beneficiary turns 72 years of age.  

Roth Individual Retirement Account (Roth IRA)

Contributions made to a Roth IRA are not tax deductible. However, contributions can grow with no tax obligation. Roth IRAs have a five year holding period and distributions cannot be made prior to age 59 ½. There is no requirement that distributions must begin by age 72.

What Happens To My Individual Retirement Account (IRA) When I Die?

With all IRAs, you must name a beneficiary or beneficiaries. With proper structure and planning, your IRAs can not only benefit you in your retirement but also those beneficiaries after you die. Without proper structure and planning, they can be a headache for your heirs after you are gone. Two of the most commonly used options are discussed below, but there are more options your estate planning attorney can review with you. 

Spousal Rollover IRAs and Inherited IRAs

Most IRAs allow a spouse to “rollover” the assets of the deceased into their own retirement account. The tax deferred status of the assets is preserved, and there are no taxes or penalties to be paid at the time of the transfer. This is usually the best option for a spouse. Other beneficiaries can also rollover the assets into an Inherited IRA account, but there are more restrictions on these than on the spousal rollover. For example, the beneficiary cannot add additional funds to the account and must start taking distributions annually beginning the year the original account owner died.

Cash Out

Many beneficiaries like this option. They can cash out the value of the IRA with no penalty. What many fail to realize is that they will have to pay income tax on the assets and it is quite possible the cash out will bump them into a higher tax bracket for the year. 

Contact Jeff Today For Retirement Account Guidance

I invite you to contact me, Attorney Jeff Bloomfield, for guidance on your retirement accounts and how to best structure them to provide the most benefit to you and your family. I can be reached at 336-790-5107 or via my contact page.  I look forward to utilizing my estate planning knowledge and skills to help you reach your retirement goals.

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